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Section 162(a) permits a deduction for the ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on a trade or business. The performance of services as
an employee constitutes a trade or business. See sec. 1.162-
17(a), Income Tax Regs. There must be a relationship between the
expenditures and the employment. See Evans v. Commissioner, T.C.
Memo. 1974-267, affd. in part, revd. in part 557 F.2d 1095 (5th
Cir. 1977). Expenses that are personal in nature are generally
not allowed as deductions. Sec. 262(a). A taxpayer is required
to maintain records sufficient to establish the amount of his
income and deductions. Sec. 6001; sec. 1.6001-1(a), (e), Income
Tax Regs. A taxpayer must substantiate his deductions by
maintaining sufficient books and records to be entitled to a
deduction under section 162(a). When a taxpayer establishes that
he has incurred a deductible expense but is unable to
substantiate the exact amount, we are generally permitted to
estimate the deductible amount. Cohan v. Commissioner, 39 F.2d
540, 543-544 (2d Cir. 1930). We can estimate the amount of the
deductible expense only when the taxpayer provides evidence
sufficient to establish a rational basis upon which the estimate
can be made. Vanicek v. Commissioner, 85 T.C. 731, 743 (1985).
Section 274(d) supersedes the general rule of Cohan v.
Commissioner, supra, and prohibits the Court from estimating the
taxpayer’s expenses with respect to certain items. Sanford v.
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Last modified: May 25, 2011